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Committee rejects proposed change to adequate-facilities tax after hearing implementation risks
Summary
The committee voted to deny implementing the state'level change to the Adequate Facilities Tax (AFT), citing legal limits, a growth-dependent cap that could leave the county with less revenue, and outstanding unpaid collections from municipalities.
The County Legislative Committee voted to deny implementing a change to the Adequate Facilities Tax (AFT) that would replace the county's current split-rate structure with a $1.50 per-square-foot flat cap and other statewide terms.
Staff and commissioners outlined legal and financial risks if the county adopted the new framework. Staff said adopting the new plan would require repealing the county's existing private act and that once repealed the county could not return to the previous arrangement. The new law imposes a cap of $1.50 per square foot and limits application to the first 150,000 square feet for large commercial projects; it also requires a 20% population growth benchmark across a census period to retain the new rate and limits future increases to no more than 10% after an initial four-year period.
Commissioners and staff emphasized that under the current private act, municipalities that fail to collect developer AFTs can be held responsible and that rescinding the private act could shift that responsibility to the county. Staff pointed to a recent situation with the City of Hendersonville, which presently owes $225,841 in uncollected AFTs related to building permits issued without required collections; under the county's current private-act arrangement Hendersonville can be pursued for that amount.
Staff also said the county presently averages about $2.8 million per year in AFT collections (budgeted at $3.1 million this year). Adopting the new structure could reduce revenue for very large commercial developments if the 150,000-square-foot cap applies and could leave the county without a viable AFT mechanism if required growth benchmarks are not met.
After discussion and public comment, a motion to deny adoption of the new AFT framework passed; committee members directed continued outreach to the state legislative delegation on options to preserve the county's existing authority or seek a more favorable private act.
